Public Bill Committee

[John Bercow in the Chair]
SG 01 Personal Finance Research Centre

Mark Hoban: On a point of order, Mr. Bercow. I understand that regulations were published yesterday that relate to the Bill. They have not been circulated to Committee members; nor are there copies in the room this morning. Will the regulations be provided to Committee members to enable us to deliberate the Bill properly?

Ian Pearson: Further to that point of order, Mr. Bercow. I apologise that the draft regulations are not before the Committee. They were published for the assistance of the Committee in deliberating the Bill. We appreciate that much of the detail under discussion will be passed in secondary legislation. I understand that the regulations were in the Vote Office by 4 oclock, and they are certainly on the website. I will ensure that they are available to the Committee as quickly as possible. Perhaps if I look at the officials in the Box in the right way, one of them will go and ensure that the regulations are available during the morning.

John Bercow: I am grateful to the hon. Gentleman for the point of order and to the Economic Secretary for the gracious apology and clarification that he issued. Attempts will be made to ensure that copies are available to Committee members speedily. We do not need to labour the point, but the point of order was fair and reasonable. As a matter of good order and practice in the future, it is important that material germane to the Committees considerations is available in an easily accessible form for Committee members when deliberating.

Clause 1

Saving Gateway accounts

Jeremy Browne: I beg to move amendment 1, in clause 1, page 1, line 4, leave out from by to end of line 5 and insert
an eligible person (within the meaning given by section 3)..

John Bercow: With this it will be convenient to discuss amendment 2, in clause 1, page 1, line 15, leave out subsection (3).

Jeremy Browne: I welcome you, Mr. Bercow, and everyone else to the Committee. I am sure that I will be first of many to say what a pleasure it is to serve under your chairmanship.
By way of introduction, may I say that the Liberal Democrats support the Bills broad principles? We see virtue in incentivising people who are on low incomes to save money. The savings will serve as a buffer against unexpected emergency expenditure. Such accounts should inculcate a savings culture and spread a sense of asset-owning stakes in society.
As one might expect, clause 1 defines the savings gateway account. I confess that amendments 1 and 2 are somewhat finickity. They are designed to improve the Bills drafting, rather than to make a broader political point. Clause 1 states that the account holder must first receive a notice of eligibility and secondly be
an eligible person at the relevant date.
However, they will not receive a notice of eligibility unless they are an eligible person at the relevant date. The wording is therefore unnecessarily complicated. Amendment 1 would delete the requirement to have received a notice of eligibility. There is no reason why a person who is eligible under clause 3 should have to wait for Her Majestys Revenue and Customs to issue a notice. If they have to wait, the danger is that they will be subject to any administrative inadequacies that arise at HMRC. For example, if there was a backlog or a notice was lost in the post, a person who was deemed to be eligible would suffer.
I could speak at greater length, but I have made the point. It is not a major point, but one about drafting. The Economic Secretary may wish to consider not putting that additional obstacle in the way of people who want an account. If they are eligible, the additional criteria are unnecessary.

Mark Hoban: I assume that the notice is required because an account provider will know that somebody is eligible if they can furnish them with the notice. If there is no requirement to produce the notice, how will a person who qualifies under clause 3 prove to the account provider that they are eligible?

Jeremy Browne: My understanding is that such people would be deemed eligible. The essential point is that, if they have received the notice, they must by definition have been eligible on that date; otherwise they would not have received the notice. I am willing to have further light shed on that by the Economic Secretary before we get on to the more substantial aspects of the Bill.

Stephen Ladyman: I welcome you, Mr. Bercow, to the Committee and look forward to serving under your chairmanship.
I have a quick question along the same lines as that asked by the hon. Member for Taunton, who tabled these amendments. Given our experience of the occasional inefficiencies of HMRC, I wonder how many of our constituents will not get their notice of eligibility when required, and how many will end up in their MPs office, asking for help to get them. I would like assurance from my hon. Friend the Economic Secretary that notices will be issued as soon as someone becomes eligible, that some mechanism will be put in place to ensure that they are routinely issued and that we can count on everyone eligible having a notice as soon as they are entitled to go to the relevant account provider and open one of the savings accounts. It seems to me that we might be adding possible inefficiency to the process by doing things in this way. I should like to hear his comments.

Ian Pearson: It is a pleasure to serve under your chairmanship, Mr. Bercow. I hope that I can persuade the Committee that we are not placing burdens or, in the words of the hon. Member for Taunton, being pernickety and overcomplicated. We are actually providing opportunities, and I would like to explain why the legislation should stand as it is.
As the Committee is aware, clause 1 sets out the general features of the saving gateway account, including specifying that it is an account
held by a person who has received a notice of eligibility...and who was an eligible person at the relevant date.
We will discuss eligibility in more detail when we come to clause 3, but, broadly, to be an eligible person someone must be entitled to one of the qualifying benefits or tax credits and have a specified connection with the UK. In most cases, the relevant date will simply be the date when a notice of eligibility is issued to the person by HMRC. I tell my hon. Friend the Member for South Thanet that we will make sure that that is done in an orderly and timely way.
Our intention is for data to be transferred from the Department for Work and Pensions to HMRC, which will issue the eligibility notices frequently, possibly fortnightly or monthly. Some people might move off a qualifying benefit before they receive their notice of eligibility. In those circumstances, because we do not want to stop people who fit our normal criteria receiving support under the Bill, it is important to have both elements of the eligibility criteria: receiving a notice of eligibility and being eligible at the relevant date.
Under amendments 1 and 2, anyone whose eligibility status changed would have to lose their saving gateway account. That would be confusing for account holders and costly and complicated for account providers. Amendment 2, in particular, would remove the definition of the relevant date for the purposes of subsection 1(a), and if amendment 1 was not agreed, the conditions set out in subsection 1(a) for a saving gateway account holder to be someone who was an eligible person at the relevant date could not be satisfied. As a result, no account held could be a saving gateway account, because there would be no way of identifying the relevant date. I hope, therefore, that the hon. Gentleman will withdraw the amendment.
I will say something more specifically about subsection (1)(a), under which people who are eligible on the relevant date will be able to keep their accounts and receive the match payment, regardless of whether they remain eligible. Removing an account from people whose eligibility status changed could, though this is unlikely, provide a perverse incentive for eligible people not to seek to move back into work, or into higher paid work, to maintain tax credit or benefit status. It would also make the accounts more complicated for providers and the Government to administer, as accounts would have to be closed frequently. That would be extremely burdensome for providers, which is another good reason for us to resist amendments 1 and 2.

Stephen Ladyman: I want to clarify something that arose in the evidence sessions, and I will want to return to it under clause 3. Am I right to think that my hon. Friend said that, if someone is eligible for a savings account and opens one but goes back to work the next day and is therefore not eligible, he or she is allowed to keep the account until it has run its course?

Ian Pearson: Yes, that is right, and with that I ask the hon. Gentleman to consider withdrawing the amendment.

Jeremy Browne: I am grateful to the Economic Secretary for his comments and to have had the opportunity to get the ball rolling, but I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2

Notices of eligibility

Jeremy Browne: I beg to move amendment 3, in clause 2, page 2, line 6, leave out paragraph (a).

John Bercow: With this it will be convenient to discuss amendment 23, in clause 2, page 2, line 12, at end add
The expiry date is either three months after the issue of a notice of eligibility or cessation of eligibility as defined in section 3, whichever is earlier..

Jeremy Browne: The territory here is similar to that which concerned the amendments that I tabled to the previous clause. Clause 2 will require HMRC to issue a notice of eligibility to each person who qualifies under clause 3. The crucial point to draw out with the amendment is the requirement that the notice of eligibility should include an expiry date. If one is eligible, one continues to be so until eligibility ceases. Unless one can see into the future, the expiry date would not necessarily be an accurate prediction of eligibility.
For example, if one were to leap forward to clause 3, one of the eligibilities is severe disablement allowance. One can imagine that unless an amazing cure were invented in the meantime, that allowance would continue beyond the recorded expiry date. However, eligibility for jobseekers allowance may not. The Economic Secretary clarified that that would continue for the whole period; even if one were only eligible for a day and then became employed as a premiership footballer on £70,000 a week, one would still be eligible for the remaining two years to draw this very generous support from the taxpayer.
Some of the criteria, however, would be permanent. An expiry date in those circumstances may create an extra administrative burden on the people who would have to reapply, or who may allow their eligibility to lapse unwittingly. They would then have to demonstrate their eligibility again, even though they were claiming on the same basis as the first time around.
The point is one of ease of access for people who may be disinclined to partake in such initiatives and incentives. It would not be desirable to put extra barriers in their way; we all share the same objectives. If people are eligible to start a saving gateway account, it does not necessarily need to be made clear when they may or may not cease to be eligible in the future.

Mark Hoban: I add my welcome for your chairmanship, Mr Bercow, to the welcomes offered by other hon. Members. I want to speak to my amendment 23, which looks at the question of when the eligibility notice expires and is very much probing. Clause 2(2)(a) states that there will be an expiry date, but that date will be specified in regulations. Of course, the amendments were tabled before the regulations even appeared in the Vote Office yesterday.
Our suggestion here is that the expiry date be either three months after the date of issuance of the eligibility notice or cessation of eligibility, as set out in clause 3, which specifies the benefits that someone is entitled to, which then triggers their eligibilitywhichever is earlier. I am trying to set out a sensible parameter for the expiry of the notice and I suggest three months; it may take someone a while, once they become eligible for benefits, to decide whether to open a saving gateway. They may need to consider whether their income would enable them to save £25 a month, or whatever amount happened to be specified. Perhaps there should be a reasonable period in place before the expiration of the notice and perhaps people would then have an incentive to think about it, rather than leaving things until the latest possible moment.
Also, considering the other qualifications on cessation of eligibility, once someone stops being eligible for a benefit, surely they should stop being eligible for a saving gateway. We touched on that topic when we debated the previous clause. That is the thinking behind amendment 23.

Stephen Ladyman: Again, I have just a few questions for my hon. Friend the Economic Secretary. Is it envisaged that the expiry date of ones eligibility notice will be short terma month, perhapsor will it be longer term? If ones eligibility for the saving gateway continues after the expiry date, will another eligibility notice be issued? For example, if someone has a three-month expiry date and is eligible for a saving gateway account for 12 months, will they get four notices in that period? Will there be a process in place to ensure that people get a notice immediately on the expiry of their old notice or will there be a gap between the two?

John Howell: It is good to sit under your chairmanship once again, Mr. Bercow. I want to raise a point in relation to clause 2(2) on the notice of eligibility. We are talking about a number of aspects relating to the expiry date. Is this the right occasion to ask the Economic Secretary whether this is a good place to ensure, as it is not in the regulations, that there is also a health warning on the notice of eligibility as to what happens in the event of withdrawal? There seems to be no other place for that aspect to be rammed home at the beginning, given the somewhat chaotic lives of some of the people who would be eligible for the account.

Ian Pearson: Clause 2 deals with the notices of eligibility that HMRC will send to eligible people. The amendments tabled by the hon. Members for Taunton and for Fareham are very different, so let me deal with them in turn. Amendment 3, which stands in the name of the hon. Member for Taunton, would remove the need for the notice of eligibility to contain an expiry date, along with any other information about the participant that was set out in the regulations. Obviously, it is essential that notices of eligibility contain information about the eligible personfor example, their name and address. This will allow account providers to carry out their account-opening checks and prevent those who are not eligible for the scheme from opening an account using a notice issued to another person. However, going by the hon. Gentlemans comments, I strongly suspect that his main point is about the expiry date.
Considering the amendment in isolation, its impact would be that once the notice of eligibility had been issued it would be valid indefinitely. That would mean someone who was at one point eligible for a saving gateway account could open their account at any point in the future, regardless of any change in their tax credit entitlement circumstances. That is clearly undesirable. Including an expiry date on a notice of eligibility is essential to ensure that eligibility for the saving gateway account is targeted on working-age people on lower incomes, rather than people who were in that group in the past.
As I explained to my hon. Friend the Member for South Thanet, it is certainly our intention that those who are eligible and who take up the saving gateway within the three-month period, even though their circumstances might have changed, should still open an account. However, we do not think it is a sensible approach to say that the notice of eligibility would last for all time and that in five, 10 or 20 years a person would be allowed and be eligible to open a saving gateway account.
Amendment 23, which stands in the name of the hon. Member for Fareham, provides that notices of eligibility would expire after three months, or when the holder of the notice ceased to be an eligible person. Again, let me say that our intention is to provide in regulations that all notices of eligibility will have an expiry date of three months from their date of issue. However, we do not believe that that should be put in the Bill.
Our intention is that the notice of eligibility should contribute to the simplicity of the scheme for account applicants and account providers. Where an eligible person receives a properly issued notice, we believe that they should be certain that that entitles them to open an account with an approved account provider until the expiry date printed on the noticeprovided that they have the necessary connection with the UK.
We believe that account providers and eligible people will welcome that approach. It provides certainty and should minimise the number of accounts that are opened wrongly, as well as allowing people to plan ahead and consider when they should open an account. However, if amendment 23 was agreed to, the change in circumstances could mean that that person was no longer eligible to open an account. In other words, a person who wanted to open an account would need to be eligible not only at the relevant date, which we have just discussed in relation to clause 1, but at the date on which they opened their account.
We considered that aspect carefully and decided against it. If individuals were required to be eligible at account opening, that would obviously need to be confirmed in some way. It would also not be possible for the account provider to check with HMRC, because the saving gateway database will not have a real-time record of peoples entitlement to qualifying benefits and tax credits. As I indicated to my hon. Friend the Member for South Thanet, the information will be transferred periodically. That will be done regularlyprobably fortnightly or monthly, but not in real time.
Therefore, if we were to accept the proposals tabled by the hon. Member for Fareham, we would have to introduce a new bureaucratic system to ensure that people were eligible on the date that they opened the account. It would not be available then to people who were eligible at a particular time.
The other approach would the individual needing to self-certify their entitlement to one of the qualifying benefits or tax credits. Self-certification could also mean accounts needing to be disclosed if HMRC later found that someone had opened an account when no longer eligible to do so. Again, that would place additional burdens on account providers. We are very keen indeed to minimise the burdens placed on those who intend to offer saving gateway accounts.

Mark Hoban: I am grateful to the Economic Secretary for his explanation and I understand his point about the administrative convenience of having, say, a three-month eligibility period before the notice expires.
What assessment has the Economic Secretary made of the proportion of people opening an account who will no longer be eligible for the benefits set out in clause 3? I am not sure whether dead-weight cost is the right phrase, but there is a big cost there for people who are not eligible for the benefits, but who are, due the three-month period, eligible to open a saving gateway account and perhaps are not in the low-income categories that the Bill targets.

Ian Pearson: That is a perfectly valid point for the hon. Gentleman to raise. The work that we have done suggests that there will clearly be some people who are in that category, having moved off qualifying benefits in the period before the notice of eligibility is received by them. We do not think that those numbers are likely to be very high. We believe that the people that we are talking about, who might have moved off those qualifying benefits, are those we would generally want to target anyway. While it is true that some people might move out of entitlement, we estimate that that will be the case in about 4 per cent. of the accounts that are opened. It is not a significant figure.

Jeremy Browne: I would like to follow on from the point made by the hon. Member for Fareham. Does the Economic Secretary envisage that people who, for example, do seasonal workwhere they are perhaps quite well paid for nine or 10 months of the year, but then do not work for the remaining two or three monthsmay see this as an enticing way to bulk up their savings by qualifying during the period when they are not working, even though their earnings during the year would make them far too wealthy to qualify in any other circumstances? Have I misunderstood? As I understand it, they would be eligible to put their names forward so long as they were claiming benefits during the short period of the year when they were not working for seasonal reasons.

Ian Pearson: If people are on a qualifying benefit, they are entitled to open a saving gateway account. We have to remember that we are trying to encourage people who are working but are on relatively low incomes to save for the future. It is entirely appropriate that seasonal workers, who might spend some time on qualifying benefits, should have the opportunity to have a saving gateway account.

George Mudie: I am taking the opportunity to ask a question. I want to follow on from the Economic Secretarys first contribution about the inefficiencies of HMRC, which we have found on many occasions. If a qualifying individual turns up at their MPs surgery and says, I did not receive a notice, I have just heard about it, will the Department give that individual a fresh date, provided that they are suitably qualified?

Ian Pearson: Specifically on that question and the question raised by my hon. Friend the Member for South Thanet, as we made clear, the expiry date on the notice will normally be three months after it is issued. We think that that is the right period for people to be able to access an account. We do not intend that there will be an automatic repeat notice when that three-month period expires if somebody has not opened an account. We do not want to keep bombarding people with pieces of paper, but people who are still eligible can request new notices if they want to open an account and there will be publicity about saving gateway accounts because we want to encourage take-up. We will also have the flexibility to allow us to issue repeat notices, if at some point in the future we decide that we want do so. We think that that is a sensible thing to do.

Stephen Ladyman: I am grateful to my hon. Friend for that answer. I want to take him back to the issue of people who move off eligible benefits. Is it his intention for the gap between when somebody goes on to eligible benefits and when they receive an eligibility notice to be used for targeting the accounts on those who are not on benefits for only a short time? In other words, if it was a month before somebody got their eligibility notice and they were out of work for only a week or two, they would not receive a notice in time to open an account. Is it the intention deliberately to use that gap in some way to try to limit the people who might access it?

Ian Pearson: No, it is not our intention deliberately to use that gap in the way my hon. Friend suggests. We are planning to adopt the process of a data transfer of names of eligible people from the DWP to HMRC, which we expect to happen fortnightly or monthly. Some people who are eligible according to DWP records will have moved off in the period before HMRC issues the notices and we estimate that figure to be about 4 per cent. We think it reasonable for those people to be eligible to open a saving gateway account. Given the administrative complexity involved, we do not think it sensible to prevent them from opening an account, which is, in effect, what the amendment tabled by the hon. Member for Fareham would do. The overall eligibility criteria are well targeted and the Committee heard in evidence what our intentions are and that the Bill has widespread support.

Mark Hoban: Following on from the point raised by the hon. Member for South Thanet, may I have clarification of whether everyone who claims JSA, for example, will receive a notice of eligibility, even if they move off that benefit in the processing time between when they register and when the information is passed on to HMRC? Therefore, will everybody who claims JSA receive a notice of eligibility, even if they are on the register for only a week or a few days?

Ian Pearson: I understand that that will depend on the time between when the DWP transfers information and when HMRC receives it. Somebody might sign on and claim JSA with the DWP, but get a new job extremely quickly and therefore remove themselves from the record, so their information would not be transferred. It is likely that an estimated 4 per cent. of people whose names are on the transferred DWP data will have a notice issued by HMRC but will have moved on in that time. I hope that that clarifies the situation.

Mark Hoban: To be absolutely clear, the Economic Secretary is saying that a snapshot will be taken of the people claiming JSA when the data are transferred from the DWP to HMRC. If a person has moved on between one snapshot and the next, and is no longer eligible for JSA, that will not be picked up.

Ian Pearson: That is certainly my understanding of how the system will work. We have been talking about transferring data regularlyfortnightly or monthlyand few people will fall into that category. The bigger category will be those who have been frictionally unemployed and have moved from qualifying benefits into the mainstream labour market where they do not qualify. That is a relatively small number of people, but we still believe it right that they should be entitled to open saving gateway accounts.

Jeremy Browne: The point made by the hon. Member for Fareham is important, or will at least be thought of as important by those who come across other people whom they feel are being treated differently from them. Let us say, for the sake of argument, that person A has been eligible for JSA for a fortnight and then finds another job. Person B has also been eligible for JSA for a fortnight and then finds the same jobthey are working togetherbut person A happens to come at the point in the cycle at which HMRC is processing that information and is therefore able retrospectively to apply for a saving gateway account because he got the letter, even though he is doing the same job for the same pay as person B.
Person B will ask why he cannot retrospectively save for the next 102 weeks, or whatever it is, at the generous 50p matching rate and we will have to say, Sorry, HMRC did not process you in the same way. That will cause people to come to our constituency surgeries asking why person A is being treated differently from person B, will it not?

Ian Pearson: I understand the point that the hon. Member is making and, on grounds of fairness, we should look to ensure that people are treated identically if they have had similar periods off benefits. We are talking about a very small number of people, but let me reflect on the point about how the administrative systems will work. Clearly, we want to ensure that we treat all people fairly, even if we are talking about those who are moving quickly from benefits to being in work at a level where they are not entitled to benefits. I will come back to the Committee on that.

George Mudie: I would be grateful if the Economic Secretary answered my question, which got caught up in other questions. I know that it was insignificant, but I would still appreciate an answer. I see from the puzzlement on his face that he has forgotten it. It was simply about a person who turns up and says that they have not received an eligibility indication.
I am anticipating an answer, but that involves time, so I shall ask two further questions. First, I would like the Economic Secretary to reconsider the business of following up those who do not take up benefits. We are conscious of the lack of take-up of various benefits and we profess to being interested in persuading people to take up benefits that are profitable to themthis is certainly one. I do not regard receiving a reminder as beingto use the Economic Secretarys phrasebombarded.
My second question is simply about data received: four months down the road, who does an individual who has not received a form, but who has heard on the community grapevine that they should have received one, approach at HMRC? That ties up with my first question: will such people then receive a fresh eligibility date that runs for two years?

Ian Pearson: I apologise to my hon. Friend for not replying to his original question. If anybody has been missed, they are entitled to apply to HMRC for notice of eligibility. I think that that will probably take into account the situation that the hon. Member for Taunton talked about as well.
On whether we want to issue repeat notices, I want us to get that policy and legislation implemented, and to have a three-month notice period to ensure that we promote saving gateway as a programme and to see what the take-up is. If at some point after that we think that take-up rates are lower than desired and that it would be a worthwhile use of resources to issue repeat notices, we would have the flexibility to consider it. We do not want to say now that we intend to have a rolling programme of issuing repeat notices a certain number of times. Let us promote the scheme and ensure that there are clear rules on eligibility, which is lost after a three-month period. Let us see what the take-up is, but reserve the right to do more in future if we want to encourage the savings habit, which we all think is important.

George Mudie: Will the Economic Secretary answer my third question? If an individual turns up and says, I have not received it, or, I did not take it up, will they be given a new eligibility date or will they be given a notice that relates to their first date?

Ian Pearson: Such a person could request a notice and it would have that eligibility date on it. It would be round about the time that the notice was issued to them. It would not be that they were missed off and discovered it two and a half months later, leaving them with only a couple of weeks to apply for a saving gateway account; it would be from the date of the notice of eligibility that was issued. I would imagine in normal processing terms that that would be a day or two before it was received, due to the timing of posting arrangements. I hope that that clarifies matters.

Jeremy Browne: I am grateful to the Minister for the points he has made. Also, it was helpful for the Committee to explore those issues. I particularly appreciate his open-mindedness about ensuing that there is consistency in the application of eligibility for people who touch upon that eligibility only before moving on to, for example, paid employment. I look forward to hearing his response to the Committee either later in our deliberations or when the Bill returns to the Chamber for consideration. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Hoban: I beg to move amendment 22, in clause 2, page 2, line 11, after person, insert
but the person has not opened a Saving Gateway account.
This is a probing amendment. Subsection (3) states:
Regulations may provide that the Commissioners may... issue a further notice of eligibility to an eligible person.
We touched on this subject a little during the previous debate. The clause does not explain what happens when someone has already opened a saving gateway account. Are they entitled to receive a further notice of eligibility? We touched on a broader issue, which we will debate in a later group of amendments, but it seems fairly straightforward that if the intention is for people not to have more than one saving gateway account, it should not be possible to reissue a notice of eligibility if they already have an account.

Ian Pearson: The amendment relates to further notices of eligibility being sent to people whose original notices have expired. The Bill already provides that those can be sent only to people who remain eligible for the saving gateway. The amendment also specifies that they could be sent only to people who had not already opened a saving gateway account. I hope to be able to persuade the hon. Gentleman that that is our intention; it is set out in the draft regulations, which we have published.
Draft regulation 5(4) provides that a further notice of eligibility may be issued to an eligible person at the discretion of the commissioners where the expiry date of a previous notice has passed and the person has not opened a saving gateway account. That addresses the issues raised by my hon. Friends the Members for Leeds, East and for South Thanet.
We believe it sensible to put that provision in secondary legislation rather than the Bill because if the Bill were to prevent HMRC from issuing a further notice of eligibility, the flexibility for people to be given the chance to have a second saving gateway account during their lifetime would be removed. While at the moment we do not intend to offer a second account, it is sensible and prudent to establish that if the Government felt that appropriate, primary legislation would not be required.
In clause 6(5), which we shall debate in due course, along with amendment 30, we have ensured flexibility to change our position. I hope that the hon. Member for Fareham is reassured that we intend further notices of eligibility to be sent only to people who have not already opened a saving gateway account. I hope that his probing has given him the answers he seeks and that he will withdraw the amendment.

Mark Hoban: I am very grateful for that explanation and am content that the regulations cover the point that I raised. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mark Hoban: Given the long time we have spent on it, the Committee might have thought that we had exhausted every possible question about a clause that has only about 10 lines. However, I have two questions. One is about ensuring that the notices of eligibility are issued. Some benefits are administered by HMRC and some by the DWP. How will HMRC ensure that people receive only one notice and not a blizzard? The second question is about the information in the notice. I know that this is covered by regulation, but in last weeks evidence session, the account providers mentioned the administrative cost of the accounts, and said that the likely cost would have an impact on whether they were prepared to offer them. One way to reduce the administrative cost to account providers is to give sufficient information in the notice to ensure that providers do not need to go through the usual account-opening process, which can be laborious and time-consuming. I wonder whether that information will be sufficient for providers to take as given a persons name and address. Will the Economic Secretary clarify that?

Stephen Ladyman: Now that we have reached the end of clause 2, it is worth putting some thoughts on the record. It seems to methe Economic Secretary will confirm whether this is the intentionthat clauses 1 and 2 are about simplifying the accounts to keep the cost as low as possible. The bankers and the representatives from whom we took evidence made it clear that some of them were reluctant to take on the accounts, because of the operational costs. Given what we now know about the banking industry in this country, I would have thought that the bankers might be keen to do something pro bono and show themselves occasionally to be doing something for the public good, but clearly that is not their intention. They made it clear that if there is no profit they may not be prepared to operate the accounts.
The Economic Secretary and his team have tried to think of ways to keep the process as simple and foolproof as possible, and I applaud him for that. The problem is that if things are kept simple, inefficiencies and unfairnesses are introduced. We need to be absolutely open about those unfairnesses and inefficiencies so that in five years time when we read the article in the Daily Mail pointing out how many people who perhaps otherwise should not have got one of these accounts have managed to get one, or we read the stories from Opposition Members about how many people have been to their surgeries complaining that they have not been able to get one of the accounts when they should have been able to do so, we have it on the record that we did this with our eyes open and we knew that there would be inefficiencies.
My hon. Friend has made it clear that he will reflect on the questions that have been asked about the potential unfairnesses. That is a generous offer, but I encourage him to reflect thoroughly and to spell out on Report what the potential unfairnesses are. Some are quite obvious. Some Opposition Members will lose their seats at the next general election, and I hope that they will be eligible for jobseekers allowance for only a short period. Nevertheless, they will be entitled to open a saving gateway account during that period. Good luck to themthey deserve to get some bounty from the Labour Governmentbut we must accept that we have built that level of poor targeting into the Bill.
As my hon. Friend the Member for Leeds, East pointed out in his questioning, it is more important that some of our constituents are genuinely the people we want to target with these accounts, but those who are fortunate enough to get work quickly may not receive their eligibility notice in time, so they will come to us as Members of Parliament and say that it is not right that they could not open such an account. We must be able to explain to them the rationale behind the measure.
Finally, the Minister said that repeat eligibility notices will not be issued. I understand why he takes that view, but I encourage him to say that at least one repeat notice should be sent to people who are still eligible for the gateway saving account at the end of the three-month period. Some people will be new to receiving benefits, because they will be out of work for the first time. They may be unsure of how to budget and wonder whether they can afford to put the money away. Three months later, when they have managed to get their life in order, they may realise that they could have afforded it. I encourage the Minister to support at least one more notice.

Jeremy Browne: Does the hon. Gentleman share my view that concern about bombarding our constituents with correspondence does not seem to weigh as heavily on the minds of Government Ministers when the constituent concerned is indebted to Government agencies rather than eligible for financial support?

Stephen Ladyman: I would not take that cynical view of Government for one second. Making these accounts available is good news for our constituents. If the Government were interested in currying favour with our constituents, they would say that they are going to bombard them with these notices.
If there are not to be repeated eligibility notices, at least one more notice should be sent out at the end of the three-month period, telling people that they are entitled to take up an account at any time until they cease to be eligible under the system. It should say that we will not send them more notices but that they should keep it in mind that they can still set up an account. The purpose of the accounts is to encourage saving. They are not intended to make a lot of money for anybody or to help to reduce Government indebtedness by getting massive savings into the banks. They are intended to encourage a state of mind. Therefore, I think that it is worth sending one more reminder after three months telling people that they continue to be eligible for these accounts, even if that is the final reminder. I would like my hon. Friend to keep those things in mind and to put some of his thoughts on the record on Report.

Ian Pearson: Although the clause is just over eight lines long, it has produced a number of debating points. However, I think that it is important and that it should stand part of the Bill. I do not think that there is any dispute about that, but I will respond to the comments that have been made.
The hon. Member for Fareham raised a number of operational points on how the detail of the clause will work. Our intention is that the HMRC system should be designed to ensure that only one notice of eligibility is issued at a time. It will eliminate any duplication from the different qualifying benefits. If somebody is eligible through more than one route, that will be taken into account.
I might have confused the Committee when talking about jobseekers allowance and the transfer of data. Having thought through the matter more clearly, there might be some data transfer issues. It is clear in my mind and in the legislation that eligible persons under clause 3 will be entitled to open a saving gateway account. We must ensure that the administrative arrangements are sufficiently robust so that people who move on and off the jobseekers allowance register quickly are not inconvenienced and do not have to go to the trouble of making a separate request to HMRC.
The hon. Gentleman also asked what proof of identity will be needed to open an account and whether a notice of eligibility will give sufficient assurance by providing the name and address. What evidence they accept as proof of identity or address is a matter for the providers. We will work with them and financial inclusion groups to explore how providers ID requirements can best be balanced with the need to prevent the account opening process becoming an obstacle for savers. We want it to be as simple as possible, but we must ensure that basic checks are made.

Stephen Ladyman: It has just occurred to me that we have introduced legislation intended to combat money laundering that requires people to produce certain identification when they open bank accounts. I advise my hon. Friend to ensure that there is no conflict between the Bill and the requirements of money laundering legislation.

Ian Pearson: My hon. Friend makes a good point. There is no intention that there will be any such conflict. We will continue to hold discussions with the banks to ensure that we get the provisions right.
Duplicate notices may be issued if people lose their first notice. If they find the initial notice at a later date, they might be tempted to open two saving gateway accounts. Clearly, that should not be possible. Draft regulation 13(2)(a) makes it clear that people opening accounts will be required to declare that they have not opened a gateway saving account previously. The hon. Member for Fareham, too, raised the issue of duplication, but I think I have given the assurances that he wants. There is already a process to ensure that individuals cannot open multiple individual savings accounts, so we are familiar with this area. I have no reason to believe that we will not be able to deal with this matter in a satisfactory manner.
My hon. Friend the Member for South Thanet made a number of additional points. We will come on to the reason why non-income related benefits such as contributory jobseekers allowance are included under amendments 26 and 27, so perhaps he will allow me to leave the issue until then. I have two things to say on issuing reminders. First, there is a great opportunity for all MPs to campaign to promote saving gateway accounts in their communities. I hope that we will facilitate that as a Government.
We do not know at the moment what the likely take-up of saving gateway accounts will be. We obviously want to ensure that it is as high as possible. We will consider whether to have further notices in future, but we do not have to include that in this legislation, nor is it an impediment to making progress on the Bill. If we decide to do so in future, it will be a policy decision taken in the ordinary way. I take my hon. Friends point that we want to encourage this policy to be a success: we want people to get into the savings habit, we want to make it as easy as possible, and we want to remind them of this opportunity. In that spirit, I hope he will appreciate the flexible way we are proceeding with the legislation.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3

Eligible persons

Jeremy Browne: I beg to move amendment 4, in clause 3, page 2, line 17, leave out paragraph (b).
This is a simple, clarifying amendment. Clause 3 (1)(b) says that
the person has a connection with the United Kingdom of a kind prescribed by regulations.
Unless I have not fully understood the nature of those regulations, I am slightly uncomfortable with the vagueness of the phrase, a connection with the United Kingdom. I have connection with all kinds of countries without necessarily expecting to be eligible for financial support from them. Subsection (2) lists as specific criteria
income support; employment and support allowance; jobseekers allowance
and so on. There are seven different criteria of eligibility. If one were eligible under one or more of those seven criteria, one would imagine that one also had a connection with the UK. After all, one does not qualify for JSA in the UK if one has no connection with this country. Otherwise, there would be billions of people getting UK JSA. The point I seek to draw out in this amendment stems from the fact that I do not understand the need to specify the connection with the UK when it is implicit in the nature of the list of entitlements.

Ian Pearson: The amendment would remove the requirement that a person must have that connection with the UK to be eligible for the saving gateway account. As a result, any person entitled to a qualifying benefit or tax credits would be eligible. A person may, in certain circumstances, continue to be entitled to certain qualifying benefits and tax credits, even though they no longer live in the UK, provided they still satisfy all the other conditions for entitlement. While there are good reasons for them to be able to continue to claim their benefit or tax credit when they no longer live or work in the UK, we do not believe that that is the case for the saving gateway account. The connection with the UK that individuals need to be eligible for the saving gateway account will be set out in regulations. The relevant draft regulations have been published and I hope that they will be available shortly, if that is not already the case.
Very broadly, those who live or work in the UK, as well as being entitled to a qualifying benefit or tax credit, will be able to open a saving gateway account. That will also include Crown servants posted abroad and their partners, and people who are ordinarily resident in the UK but are temporarily absent. That is one reason why the legislation is phrased in that way. It will exclude, however, people claiming incapacity benefit, severe disablement allowance or contribution-based employment and support allowance who move out of the UK permanently, although they may still be able to claim the underlying benefit. It will also exclude people who are not ordinarily resident in the UK but who would otherwise be eligible for the saving gateway through a joint claim to one of the qualifying benefits or tax credits such as child tax credit.
I appreciate that this might be slightly complicated, but the key point is that that presents no problem for the vast majority of people who are ordinarily resident in the United Kingdom. We are trying to introduce a system that is as simple as possible. We think that Crown servants posted abroad should be entitled if they qualify, as should people who are ordinarily resident here but who are temporarily absent, perhaps because they are working or have activities abroad that take them there for a period of time. We do not think that people who are not ordinarily resident in the United Kingdom should be able to open a saving gateway account. That does not seem to us to be a very targeted use of taxpayers money. I hope that that clarifies the points that have emerged. The regulations, which I am sure we will consider in due course, explain this in more detail, and no doubt we will return to them later.

John Bercow: Order. Just in case any Member is not aware and in the light of the point of order raised by the hon. Member for Fareham, copies of those draft regulations are now available in the Room. Connection with the UK is addressed on page 5.

Jeremy Browne: I am grateful to be made aware of that, Mr. Bercow. I do not doubt that it is possible to come up with a whole list of criteria and regulations which satisfy the drafters in the Ministers Department. The concern often expressed is that it is very difficult for members of the public to understand who is, or is not, eligible for certain entitlements, and why they are not eligible when someone they know who appears to be in similar circumstance is eligible. This is typical work for an MP, both in their surgeries and in correspondence. It is strange to have a list of criteria, one or more item of which has to be satisfied, then come up with a separate category which is defined in regulation by another list of criteria.
This may be for the DWP rather than the Treasury, but quite a few people would find it strange that there are people claiming benefits who are essentially receiving money directly from the UK Government despite having no connection with the United Kingdom of a type laid out in the regulations. I think that most people would feel that if someone had no connection with the UK they should not be receiving the benefits listed in subsection (2). There may be co-ordinating criteria explaining why it is so much easier to get benefits than it is to open one of the new saving gateway accounts and why our taxes are being spent on people who have no connection whatsoever with the UK, but I sense the Economic Secretary is not keen to add the type of clarity that I would wish to see. On that basis, having made my point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Hoban: I beg to move amendment 26, in clause 3, page 2, line 21, at beginning insert income-based.

John Bercow: With this it will be convenient to discuss amendment 27, in clause 3, page 2, line 22, at beginning insert income-based.

Mark Hoban: These amendments relate to entitlement, which was alluded to in an earlier debate. They would insert the phrase income-based in subsection (2)(b) and (c). At the moment, employment and support allowance and jobseekers allowance can be claimed on either an income or on a contributions basis. We want to make sureand the Economic Secretary made this point in his response to the amendment tabled by the hon. Member for Tauntonthat the resources are targeted well and carefully on the demographic that we want to develop a saving habit. The hon. Member for South Thanet talked about MPs losing their seats in the next election and being able to claim contributions-based JSA, open a saving gateway account, then moving out. Perhaps the House authorities might take that into account and put it in a leavers pack for MPs at the next election. It is an example of people who could claim the contributions-based JSA, see the opportunity to put £600 into an account, and get £300 back from the Government. That is a good rate of return, and probably reflects a dead-weight cost. I think the second pilot was meant to reduce the income threshold so that people who were already saving or were in a position to save were not diverting savings from a different account to benefit from the 50 p in the pound match. The amendment seeks to narrow down eligibility to those who are claiming income-based JSA or employment and support allowance.

Jeremy Browne: rose

Stephen Ladyman: rose

Mark Hoban: I can sense that both hon. Members are desperate to intervene. I will give way to the hon. Member for Taunton first and then to the hon. Member for South Thanet.

Jeremy Browne: I am grateful to the hon. Gentleman for giving way to me first. I understand his desire to try to reduce dead-weight costs, and I share that instinct. However, I am always concerned when the complication of any scheme acts as a disincentive preventing people from participating in it. In particularobviously, I am making a generalisationI am talking about people who are on low incomes and may not necessarily have saved in the past or be familiar with the mechanisms for saving. Is it not a worthwhile consideration, even it may slightly increase dead-weight costs, to make sure that people are not disincentivised to save because they find the systems intimidatingly complicated?

Mark Hoban: I am not sure that I agree that that point applies to the design of the system, because we have already introduced some complexity, through the reference to whether someone is ordinarily resident in the UK. I do not think that is a huge increase in complexity, but I do think there is a needand I would be grateful for the Ministers comments on this, and it is partly why I tabled this amendmentto understand the demographics of the group claiming JSA on the basis of national insurance contributions. One of the points made in the evidence session last week by Teresa Perchard of the CAB, and by Brian Pomeroy as well, was that a high proportion of people who claim contributions-based JSA are on low incomes. They could, by virtue of the eligibility criteria, help to develop a savings culture through their entitlement to open a saving gateway account.
If the Minister says, Yes, there is a high proportion of people in that demographic group claiming contributions-based JSA who are on low incomes, and it is right to enable them to acquire a savings gateway account, I am quite content with that explanation. I am just probing the rationale for including contributions-based JSA, which would potentially allow quite a large number of people to open a saving gateway account even though they are outside the target demographic for this initiative.

Stephen Ladyman: I cannot recollect whether the hon. Gentleman was in the Chamber yesterday for DWP questions, but it was a recurrent theme among Conservative Members that there is insufficient difference between the benefits people get, having paid contributions all their lives, and the benefits they get if they had not paid any contributions when they became unemployed. It seems ironic that, if that is the view of the Conservative party, he should suggest that we should narrow again the difference between the benefits that people receive, whether they are claiming income-based JSA or contribution-based JSA. Not to make this benefit available to those who have made contributions would be very unpopular among Conservative Members.

Mark Hoban: The hon. Gentleman makes an interesting point. It is certainly a point that has been raised with me by my constituents. I received a letter last week from someone who had paid national insurance contributions all their life. When they claimed JSA at £60 a week, because they were single, they wondered why they had bothered to pay for that benefit, and wondered what they got in return for their contributions. The hon. Gentleman makes a very important point, but we are trying to ensure that this initiative is well targeted. We should think about the potential leakage to people who are already saving, and we should ensure that our approach provides value for money. I tabled amendments 26 and 27, not simply to press them to a vote, but to obtain clarification from the Government about the impact of extending the measure to people who claim JSA on the basis of their contributions. It is a big part of the teasing-out process, which is important for scrutiny in the House.
One may argue that capping the contribution at £25 a month might reduce the extent to which the measure could be taken advantage of by people who have savings in other sources and who want to switch from an ISA or an instant-access savings account to a saving gateway account. Perhaps the Governments objective is to try and broaden the eligibility criteria as far as possible, within reasonable boundaries, while preventingI do not like the word abusepeople from taking advantage of it, by limiting the amount of money that they can pay into the account. That would be reasonable.
These are probing amendments. What will the impact be of enabling people who qualify for JSA based on their national insurance contributions to take up the saving gateway account? Are people who claim contributions-based JSA in the target demographic for the saving gateway account, as suggested in the evidence session last Tuesday? Those people do not have a history of saving and this would be a good way for them to acquire that savings culture.

Ian Pearson: I accept the probing nature of amendments 26 and 27, and I am happy to put the Governments thinking on record. To summarise, we think that most people on contributory JSA would be moving from one low-income job to another. We do not have incredibly good data on that, but it is our strong view that that is the case. Given the advantages of passporting from qualifying benefits and tax credits in the Bill, it is the appropriate way to go. I shall provide the hon. Gentleman with a little more detail because, as he is aware, the amendments would restrict entitlement to individuals who are on the income-based forms of JSA and ESA.
I understand the points that the hon. Member for Fareham has made. Some contribution-based JSA and ESA claimants might have relatively high levels of savings, but we do not believe that it is the case. In any system of passporting, there are some rough edges. However, the advantages of passporting outweigh the disadvantages, particularly the fact that some people with relatively high savings might qualify. The fact that people will not be required to fill out a form or complete a means test to prove that they are eligible for a saving gateway account is an important part of the programme. As the hon. Gentleman rightly says, if we are talking about a small number of people who have relatively high levels of savings, the sort of incentives that the saving gateway will provide would not have a great attraction to them.
I would like to give a little more detail, starting with contribution-based JSA. Sharon Collard, of the personal finance research centre at the university of Bristol, told the Committee at last weeks evidence session that
people moving off...JSA are unlikely to be moving into highly paid employment. We know that that is the case.[Official Report, Saving Gateway Accounts Public Bill Committee, 27 January 2009; c. 24, Q48.]
I would like to have better information on the numbers involved, but it does not seem to be available. We would be concerned that if contribution-based JSA were not a qualifying benefit, people who move in and out of work frequently and do not therefore move on to income-based JSAwe have good evidence about such peoplewould not be eligible for the saving gateway account. In October last year, the average time spent on JSA was 3.7 months, but most people will not move from contribution-based JSA to income-based JSA until they have been on JSA for about six months.
Inclusion of contribution-based JSA was supported by Teresa Perchard of Citizens Advice in last weeks evidence session. On the question of whether both income-based and contribution-based JSA should be qualifying benefits, she said:
Sticking with broad availability for both groups is appropriate.[Official Report, Saving Gateway Accounts Public Bill Committee, 27 January 2009; c. 7, Q16.]
All the research and evidence points to that being the appropriate thing to do. Similar arguments apply to contribution-based ESA, so I do not need to rehearse them.
Finally, it is important to remember that many people who are entitled to both JSA and ESA on the basis of their national insurance contributions will meet the income and capital requirements for the income-based benefits. The amendment would penalise those people on the basis of the national insurance contributions that they had paid. That is another reason why the hon. Gentleman will want to withdraw the amendment, although he is right to raise the problem of potential dead-weight costs. I hope that my explanations have reassured him that while the policy has some rough edges it is a sensible way to proceed, compared with significant means-testing for all applicants.

Mark Hoban: I thank the Economic Secretary for his response. When looking at a scheme one has to be pragmatic. I am sure that at some point the Opposition will point out that footballers or former Cabinet Ministers have set up savings gateway accounts. There will be a rich seam of cheap headlines, and hon. Members will perhaps want to participate in their generation. A compromise has to be struck. I accept the Economic Secretarys point that the vast majority of people claiming contribution-based JSA will be in the target demographic. Some will fall outside it, but compromises need to be made when looking at implementing the proposals. With the Economic Secretarys reassurance in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jeremy Browne: I beg to move amendment 5, in clause 3, page 2, line 28, at end insert
(h) carers allowance;
(i) housing benefit;
(j) council tax benefit..

John Bercow: With this it will be convenient to discuss amendment 39, in clause 3, page 2, line 28, at end insert
(h) Carers Allowance..

Jeremy Browne: Amendment 5 is a probing amendment in support of campaigns by the RNIB and Carers UK among others to include additional income replacement benefits in the list of qualifying benefits in subsection (2). That list contains seven benefits and tax credits that confer eligibility. These organisations have suggested that the list should include carers allowance, housing benefit and council tax benefit. The allowances and tax credits in the list are not all of the same type: some are means-tested and some are not; some apply to income of less than £16,040 a year and some do not. There are no uniform criteria for the seven listed in the Bill, so there is no inherent reason why other forms of benefit or support could not be considered in addition to those seven.
Let me briefly make the case as to why the Minister may wish to consider carers benefit in particular. According to a report by Carers UK, 75 per cent. of carers struggle to pay their bills and 54 per cent. of those carers were in debt. This is becoming an even more prevalent issueironically, given that society as a whole is becoming healthier because people are having to look after relatives who are ill, for one reason or another. If carers allowance were included in the list, 290,000 more people would be eligible for the saving gateway. Many of those peoplealthough I admit not allwould be precisely the types of people that the Minister may be keenest to help and encourage through this legislation. However, if this amendment were not accepted, they would not be eligible for that assistance and encouragement. It is on that basis that I table this amendment.

Stephen Ladyman: Amendment 39 is in my name, and it is essentially exactly the same as amendment 5. It is probably appropriate at this point for me to reassure my hon. Friend the Member for Waveney, who is the Government Whip on this Bill, that the amendments I have tabled for today are of a probing nature. I do not intend to damage my impeccable record of support for the Government any time soon, although I have a great deal of sympathy for this particular amendment. However, if my hon. Friend the Economic Secretary does not come up with a good explanation as to why carers allowance is not included, I suspect that this is something to which the House might want to return on Report.
At one point, I had the honour of being the Minister responsible for carers, so I am aware of their incredible work. It has been estimated that this work has a value to the country of more than £70 billion a year, which is the cost that would be imposed on us if we had to provide this care professionally. I am also aware that the Prime Minister is evangelistic about the need to encourage people to care and in his wish for the Government to support carers, so he would want to see us doing everything possible to make life better for them.
There are potentially two arguments that the Economic Secretary might muster for not including carers allowance. The first is that it is a poor way of targeting resourcessome carers might not be part of our target audience for such savings accounts. However, if the Economic Secretary musters that argument, he has to return to the amendments that the hon. Member for Fareham has tabled, relating to why we are not limiting those people on jobseekers allowance to income-based jobseekers allowance, rather than making it contribution-based. You cannot say in one part of the Bill that we have to target a benefit tightly, and in another part say that we want to simplify a benefit and not target it tightly. I do not accept the argument that it is about targeting.
The second potential argument that my hon. Friend might muster is that an awful lot of the people who would be entitled because they are carers will be entitled to open one of these savings accounts because they are claiming one of the other eligible benefits. If that is the case and there would not be many of them in addition, it will not cost much to include them, so we might as well do the right thing by carers.
I encourage my hon. Friendnot just today, when he responds, but in the weeks to come before Reportto think very carefully about the benefits of including carers allowance in this, including sending out a signal that we will never treat carers as being in the second tier of our thoughts. They are people whom we always want to encourage, whose value we recognise and who we believe are entitled to a bit of extra help. If this is that bit of extra help that we can offer on this occasion, why not? Let us include them in it. I ask my hon. Friend to reflect on that in the weeks ahead.

Ian Pearson: I appreciate the probing manner in which both the hon. Member for Taunton and my hon. Friend the Member for South Thanet have dealt with the amendments.
This Government have done more for carers than any previous Government, much of which was done by my hon. Friend when he was the Minister with responsibility for carers. I would continue to stress that carers are in the first tier of our minds when it comes to taking action to provide them with support. They were too often forgotten by previous Governments and I am glad that they have not been by this one.
I agree that either amendment would make eligible more people from our target group, which, let us be clear, is working-age people on lower incomes. When framing legislation, we have to look at how we can best target it while accepting that if we are trying to do something simple and broad then there will be some rough edges. When we are talking about people on contributory JSA for instance, as we were previously, we believe that the vast bulk will be moving from one low-income job to another. It is right, therefore, that contributory JSA is included rather than excluded.
It is important, however, to recognise that many working-age, lower-income recipients of one or more of the benefits in amendments 5 and 39, may already be eligible for the saving gateway through entitlement to another qualifying benefit or tax credit. Adding any of those benefits to the list in clause 3(2) would also make eligible people from outside our target group of working-age people on lower incomes, either because they are not working-age or because they have relatively high incomes.

Stephen Ladyman: My understanding is that carers allowance is an income replacement benefit. One of the most common complaints that I receive about it as a Member of Parliament is that it is lost upon reaching retirement age because one cannot have two income replacement benefits. By definition, people who are receiving carers allowance are of working age and have given up income. It seems to me that they absolutely fall into the category that my hon. Friend is trying to target.

Ian Pearson: Let me go on to explain the situation. First, carers are not excluded from the saving gateway. Those who are in low-income households will be able to claim income support, including the carers premium, in addition to carers allowance. There is also a carers premium in JSA, another qualifying benefit. People who are entitled to either income support or JSA will, as hon. Members will know, be eligible for the saving gateway. Overall, therefore, we expect around 225,000 recipients of carers allowance to be eligible for the saving gateway.

Stephen Ladyman: I cannot help thinking that many of the people on the list that my hon. Friend has just read out will actually be the person being cared for and not the carer. Someone who has given up their job in order to care for somebodypossibly not in the same household, but still as their primary carerwould be excluded from the saving gateway on that basis. It is clear from my hon. Friends tone that he does not want to exclude those kinds of people from it, but they would be on that basis.

Ian Pearson: As I have said, I do not have a detailed breakdown of the figures, within that total, of those who might be carers or being cared for. Certainly, we believe that about 225,000 recipients of carers allowance will be eligible for the saving gateway. Making carers allowance a qualifying benefit would bring many people into eligibility who we believe are outside our target group. Honourable Members will be aware that carers allowance is available to people who care for a severely disabled person and have earnings lower than £95 per week, who, by any definition, would qualify as people on low incomes.
Therefore, while all recipients of carers allowance will have low individual earnings, it is not limited to those in low-income households. Extending the scheme to all carers could bring into eligibility some people with higher household incomes. It would also bring many people who are not working age into the scheme. Of some 875,000 people entitled to carers allowance, about 500,000 are of working age, leaving 375,000 who are not. We have been very clear that the saving gateway is for working-age people on low incomes.
Of course, none of this means that we do not recognise and support the important role that carers play in our society. I want to be very clear that many carers will be eligible for the saving gateway, particularly through income support and jobseekers allowance. Our view is that making carers allowance itself a qualifying benefit would not be well-targeted, but I appreciate the points made by my hon. Friend.

George Mudie: This is just a thought on what the Economic Secretary said. Is it beyond the wit of the Department to put something in the BillI do not know if it is elsewhere in the Bill, but it could be insertedthat excludes carers who are not of working age? If that is a specific objection, it can be easily dealt with via a minor amendment.

Ian Pearson: I will certainly undertake to reflect on that point. Some 375,000 are on carers allowance who are not of working age, and 225,000 are on carers allowance who would qualify for a saving gateway account because of their receipt of other benefits, so this is an appropriate way of targeting.

George Mudie: I would not wish my hon. Friend simply to consider that isolated point, but rather to consider the whole amendment. I do not think that he can do one without doing the other. I am sad that my hon. Friend the Member for South Thanet introduced it as a probing amendment. I think that there will be a widespread feeling in Committee that this is an important amendment for those who save the Government enormous amounts of money by caring, and it deserves consideration in its entirety, not just on the age-related question.

Ian Pearson: I will certainly undertake to go away and reflect further on the points that have been made. As a Government, we have been and continue to be very supportive of carers. However, we have to be clear about what we are trying to achieve through the Bill. It is to encourage saving among working-age people on low incomes, and a significant number of carers are not in that category because they are not of working age.

Stephen Ladyman: I would be grateful if my hon. Friend could help us before Report by writing to Committee members with a breakdown of the people who he believes claim carers allowance, but who are not of working age. I do not see how anyone can claim an income replacement benefit if they are not of working age. The only people to whom that might apply would be young carers or people who have passed retirement age but are taking carers allowance rather than their pension. I would have thought that we would want to encourage young carers to save, but I do not think that they are eligible for carers allowance, and I cannot imagine that many people receive carers allowance rather than pension. I do not know where the figure of 375,000 comes from, and I would be grateful if my hon. Friend could provide us with details of that before Report. As I said earlier, I suspect that we will return to this discussion.

Ian Pearson: I will see whether I can do that. It might be possible to discuss this matter under a later clause. If not, I will happily write to the Committee to make available any information we have.

George Mudie: The Minister is opposing amendment 39 on the basis that some carers may have high incomes, but in the regulations he has taken care to put a limit of £16,000 on applicants who receive working tax credit and child tax credit. He has put that limit on working tax credit, so why is he not prepared to look at the same mechanism so that it is fair for carers who receive below £16,000, £10,000 or even £8,000?

Ian Pearson: It is possible to impose such limits without having a means-testing regime because of the income thresholds. The current Government view is that some carers will be able to open saving gateway accounts because they receive another qualifying benefit. We expect that figure to be about 225,000. However, we are proposing that two categories of carerthose in high income households and those who are not of working ageshould not be eligible for saving gateway accounts. I will undertake to provide figures because further clarification is needed in those areas.
Similar arguments apply for the insertion of housing benefit and council tax benefit under amendment 5, which was tabled by the hon. Member for Taunton. Many people who are eligible for those benefits are outside our target group. Of the 5 million families in receipt of council tax benefit, just 50 per cent. are of working age. Of the 4 million who are eligible for housing benefit, the figure is 63 per cent.
Some recipients of those benefits may also be on relatively high incomes depending on the rent and council tax that they pay. If those benefits were included in the Bill, large numbers of people from outside the intended target group would be eligible. As with carers allowance, many recipients of housing benefit and council tax benefit who are in the intended target group will be eligible through another qualifying benefit. We do not believe that including those benefits would target people well.

Mark Hoban: Will the Minister explain at what income somebody ceases to be eligible for housing benefit or council tax benefit? It is important to know where the parameters are and who we are excluding by excluding those benefits.

Ian Pearson: I do not have the figures immediately to hand. If I cannot make them available during the debate, I will happily write to the Committee about those areas. My key point is that the amendments are not well targeted. In the case of housing benefit, half of recipients are not of working age. We are clear about the fact that the intention of saving gateway is to encourage the saving habit among people who are of working age and on low incomes. It is not possible for us to support the amendments.
None of this means that we do not recognise and support the role that carers play in our society, or recognise the importance of council tax benefit and housing benefit for those who require it. Many people are eligible for those benefits; if they have another qualifying benefit, we will be able to secure them. However, it remains our view that, with housing benefit and council tax benefit in particular, the proposal is not well targeted; it is not what we want to achieve in terms of the Bills objectives. I appreciate the probing nature of the amendment, but I invite the hon. Gentleman to withdraw it.

Jeremy Browne: That was extremely useful, and I appreciate the contributions made by other Members. However, I still do not quite understand the point. The Economic Secretary was on the thinnest ice when he said that most of the people who qualify for carers benefit would probably be scooped up by other criteria in the Bill, in which case not many people would be disadvantaged. That seems to reinforce the argument for including them on the basis that the cost is presumably negligible, because most of them already qualify by other means. It would feel even more iniquitous to those who do not qualify by other means, when they see that they are in a relatively small minority and others who appear to be in similar circumstances to them are qualifying.
There is a reasonable point about how we treat carers and the impression that is given to them. I do not know whether the Economic Secretary has made any assumption; my impression is that many carers would not choose to open one of these accounts. They might feel that there were other things that they wished to do with their limited income than put it into such a savings scheme. Even if they did, they might not put the full amount of money to which they are entitled into the scheme.
I imagine that the cost to the Government of including those carers who do not qualify by other criteria and who would be inclined to use the scheme to its maximum is fairly smallI am guessing: if the Economic Secretary has any estimate, it would be interesting for the Committee to hear it. The number of people involved is, I think, fairly small, but they would regard that as a gesture of good will. Although I do not intend to press the amendment to a vote, I think the interest that has been expressed in it by the Liberal Democrats and by Labour members of the Committee is well intentioned and worthy of the Economic Secretarys reflection. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Jeremy Browne: I beg to move amendment 6, in clause 3, page 2, line 31, at end insert
(3A) Each person entitled to a benefit or tax credit with another person is eligible to hold a Saving Gateway Account regardless of whether the other person holds an account or not..
This is a probing amendment which seeks some clarity. It does not need to detain the Committee for long. The Bill states:
a person is entitled to a benefit or tax credit whether the person is entitled to the benefit or tax credit alone or with another person.
However, the wording does not make it clear whether two people who together qualify for a benefit or tax credit would be eligible to do so independently of each other. I seek the Governments assurance that both individuals would be allowed to open their own separate saving gateway accounts if they both collectively met the criteria for qualification. At present, there seems a lack of clarity between the criteria for eligibility and whether two individuals can be assessed separately and could, therefore, both open an account.

Ian Pearson: The purpose of the amendment appears to be to ensure that, with a joint claim to one of the qualifying benefits and tax credits, both parties are eligible for the saving gateway. That is already the effect of clause 3(3), which says that, for the purposes of the Bill,
a person is entitled to a benefit or tax credit whether the person is entitled to the benefit or tax credit alone or with another person.
Our view is that that is straightforward and really puts the matter beyond doubt. Therefore, we do not believe that the amendment is necessary. Indeed, the effect of the amendment would be different because it would not limit benefit or tax credit to the qualifying benefits and tax credits listed in clause 3(2). For tax credits, there is no limit in relation to the income threshold set out in regulations under clause 3(4). There is also no limit in relation to connection with the UK. So, the amendment is defective and I urge hon. Members to resist it. If it is probing, I am happy to confirm that both individuals will be entitled to take out saving gateway accounts.
Mr. Mudierose

Jeremy Browne: I am grateful to the Minister for those comments. I beg to ask leave to withdraw my amendment.

John Bercow: The hon. Member for Leeds, East wanted to contribute, but I am afraid that he needed to catch my eye a bit earlier. I am sure that he will find other ways to highlight his views and concerns.

Amendment, by leave withdrawn.

Mark Hoban: I beg to move amendment 24, in clause 3, page 2, line 34, after credit, insert
where their income is below the threshold for child tax credit and.

John Bercow: With this it will be convenient to discuss amendment 25, in clause 3, page 2, line 36, leave out sub-paragraph (a).

Mark Hoban: Amendments 24 and 25 would include in the Bill all the threshold points at which people cease to become eligible for saving gateway accounts if they claim either child tax credit or working tax credit. It relates back in a different way to the debate about the carers allowance, housing benefit and council tax benefit in that in relation to the saving gateway account there has been a thought process in Ministers minds: do we go down a route that is purely about means testing, whereby people submit an application form and if they meet the criteria they can open a saving gateway account? We know that means testing can be expensive, complicated and prone to error. Alternatively, do we use the existing architecture of the benefits and tax system to prove eligibility, so that, in effect, a person is passported through to a saving gateway account if they qualify for a particular benefit or tax credit?
I can see that that thinking is probably present in some of the Ministers responses on carers allowance and is probably part of the thought process used in designing the system. It explains why some benefits have been excluded and how Ministers slice and dice the population entitled to receive those benefits.
Clearly, the regulations referred to in clause 3(4) take that a stage further. Families with incomes of up to about £60,000 are eligible to receive tax credits at the top end of the taper. Without the test in regulations set out in subsection (4), people with relatively high incomeswho will, we hope, save anyway through ISAs or other forms of savingwould qualify for the saving gateway account. I can therefore understand why it is important to set a thresholdindeed, the threshold that has been used is the one where people cease to be eligible for full child tax credit and where a taper applies. If that is such a fundamental part of the systems architecture, I do not understand why it is not in the Bill and why it has been relegated to regulations.
The Minister will say he wants flexibility. If he does, I will understand that, but perhaps he might explain why he wants

Ian Pearson: The hon. Gentleman should want it as well.

Mark Hoban: The Economic Secretary says from a sedentary position that I should want it as well. Perhaps I should, but we will wait for that day to come. Will he explain why the Government need that flexibility and what factors would drive them to vary that threshold up or down? I tabled the amendment to obtain such an explanation. I can see the thinking that goes on in designing the system, but it would help if we understood why the Government believe that that threshold of around £16,000 is correct, why they need flexibility and what might drive them to change their mind about where the threshold kicks in. This is a probing amendment.

Ian Pearson: We set out in the document that we published in December and in the draft regulations that we published ahead of the Bills Second Reading the fact that we intend to set an income threshold above which the entitlement to tax credits will not lead to eligibility to the saving gateway. We intend to set it at the same level as the income threshold for child tax credit, which is £15,575 and will rise to £16,040 in the financial year 2009-10. We also intend to ensure that people who have been passported into a maximum award of child tax credit because of their entitlement to another benefit will in turn be passported into eligibility for the saving gateway.
The probing amendment moved by the hon. Member for Fareham would put into the Bill the link between eligibility for the saving gateway and the income threshold for child tax credit. I hope that I can assure the Committee that it is our intention to link those two thresholds, as set out in condition 2 of draft regulation 3(1). That is the appropriate level at which to set the threshold; it is the same as the threshold for receiving a higher Government contribution to a child trust fund and for several other passporting benefits.
We do not intend to depart from that, but there are good reasons for wanting to make the link in secondary rather than primary legislation. In particular, a Government may decide to alter the tax credit system, in which case it might be necessary to set an income threshold purely for saving gateway purposes. Primary legislation would not be an efficient use of parliamentary time. I am not convinced that the Conservative party is particularly keen on child tax credits, so I cannot see why it would want to make that link explicit in the Bill, as the Bill would become defective if a change of policy were desired.
A future Government might simply decide that the two thresholds, which are for different purposes, should be set at different levels. As the Bill stands, that can be done without the need for primary legislation and the regulations will be subjected to the affirmative procedure to provide the appropriate parliamentary scrutiny. That is the appropriate way to do this. I hope that the hon. Gentleman will therefore withdraw his probing amendment.

Mark Hoban: I am happy to accept the Economic Secretarys explanation as to why secondary legislation should be used and what the checks are, but our concern is not so much the principle of the child tax credit as the administration of the system. From the earlier comments about the inefficiencies of the system, I think that Labour Members share some of our concerns about the problems that the administration of the system brings to our constituents. It is difficult to get the level right.
If we are to target these measures where possible on people with a certain income, we need to have that cut-off in place. The Economic Secretarys comments about being consistent with contributions to child trust funds and with other passported benefits suggest that this is reasonable point at which to draw that line. On the back of that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

George Mudie: I wish to raise a point on the spouses situation in a household, which we discussed under the previous group of amendments. How will the Economic Secretary indicate eligibility to a spouse in a household where the husband is on income support or jobseekers allowance, but the partner or wife is at home not receiving any of the benefits, which would be the straightforward thing to do? I am thinking particularly of Bangladeshi women in my constituency. The mother is often at home for language or cultural reasons or because of children. On the question of language, the publicity that the Economic Secretary will bombard them with might pass them by without much recognition. Is there any intention to write to spouses in such households?

Stephen Ladyman: My hon. Friend is making a good point. We all know of households in our constituencies where that would be an issue. Will he suggest that the Economic Secretary consider some advertising with the family allowance? We pay that to the parent with care, so putting the advertisements with that might be a way of getting the information to that member of the household.

George Mudie: That is a sensible suggestion that the Economic Secretary will probably add to his list of sensible points that he will make to me. Will such people be sent anything with the eligibility form? For people in a number of households, the first time they will be aware of this scheme is when the form falls on the mat saying that they are eligible to participate in it by virtue of their jobseekers allowance or income support. In a low-income household, the lack of that will often mean that the individual assumes that they are not eligible. The only people that I know in low-income households do not make contact with Her Majestys Revenue and Customs without due cause. They might leave it at that and not be aware of their eligibility.
In addition to the point made by my hon. Friend the Member for South Thanet, if we do not do anything with the spouse, will there be anything in the literature sent out with the eligibility form to alert the individual that they should tell anyone else in the household who might be eligible for the scheme?

Ian Pearson: My hon. Friend is right to raise concerns about his constituents and to probe me on how the clause will work. When the legislation is on the statute book, we will consider carefully how to market and promote saving gateway accounts to individuals as part of the implementation process. As I said earlier, MPs have a role in doing that directly in their constituencies. There is a broader role for those who offer saving gateway accounts in deciding how to market them, and a role for Government in promoting the principle of the saving gateway.
On the direct question about a spouse who is not working and is at home, my hon. Friend will be aware from the criteria in clause 3 (1) and (2) that the system is based on defining an eligible person who is entitled to one or more of a number of benefits or tax credits and also passes the test of connection to the UK. If there is a claim for one of the qualifying benefits with two claimants, then both sets of details will be on the claim and both will be sent a notice of eligibility. In a lot of the instances that he is probably thinking about, low-income households will be making joint claims. In those circumstances both would automatically be sent a notice of eligibility.
My hon. Friend also raised some broader questions, such as, what if somebody got a notice and someone else did not? In that case, how would they know whether they might have qualified, and might have been missed out? Again, we would want to consider that when looking at how to promote the scheme in future. Notwithstanding the amendments discussed so far and the commitments I have made to reflect, particularly on the point about carers, I believe that we need a scheme that carefully determines eligible persons, and that is what clause 3 does.

Question put and agreed to.

Clause 3accordingly ordered to stand part of the Bill.

Clause 4

Requirements relating to accounts

Mark Hoban: I beg to move amendment 28, in clause 4, page 3, line 20, at end insert
(d) The Maturity Period shall not be less than 2 years..
Clause 4 contains two key parameters in determining how the account will operate. One is the maturity periodthe period over which the matching contribution will be calculatedand the other is the maximum monthly contribution. In keeping with the general spirit of the way in which this Bill has been put together, these important details have been relegated to secondary legislation. My amendment probesat this stage, rather than waiting for the discussion of secondary legislationthe rationale the Government have used to justify a maturity period of, say, two years. In considering the next amendment, I will talk about why the figure of £25 a month has been suggested.
The argument about the maturity period made in the evidence session last week by people such as Teresa Perchard and Sharon Collard was that if someone had not learnt the saving habit in two years, it was very unlikely that they ever would and that two years was reasonable. I wonder whether the Economic Secretary gave consideration to a period longer than two years to enable people to learn the saving culturesay, three yearsto get it embedded. One point discussed last week was the likelihood that people would continue to save after the two-year period expired. There was evidence that a significant minority of people did continue to save, but not the majority.
There are reasons why people would want to take money out of their accountperhaps they had saved with a particular purpose in mind, perhaps there was an urgent need to meet an unexpected expenseso there may have been good reasons why the participation did not continue beyond two years. However, it does raise the questiongiven that it was only a significant minority, rather than majoritywhether a longer period would be needed to encourage more people to save, to ensure that the saving habit is fully inculcated. That is the thrust behind my amendment as, other than that, there is not much to say about inserting two years as a maturity period.

Ian Pearson: These are obviously matters of judgment. From the experience of the pilots and the interviews conducted, and discussions with interested parties, we concluded that two years was the most appropriate time period. That account duration will best help potential account holders to open an account and kick-start a saving habit. It strikes the right balance between giving people sufficient time to develop a saving habit and build up a reasonable match, and allowing them access within a sensible time scale.
Clearly, the participants on the 18-month trial had a range of views about the appropriate length: some were in favour of extending the period beyond 18 months and some thought that it should be less. Annuality makes sense because people generally understand the date when they open something and the date when it is likely to mature. Of course, we want to evaluate the policy when it is implemented, but at the moment we think that two years is appropriate and that it strikes the balance we are trying to achieve.
We do not believe that the amendment, which says that the maturity period should never be shorter than two years, is appropriate, because we might find that, for a significant group of people, that saving habit can be kick-started in a shorter period. It should not be put in the Bill, but I appreciate that it is a probing amendment to explore our thought processes. I hope that my comments this morning clearly outline to the hon. Gentleman and to the Committee why we have chosen a period of two years.

Mark Hoban: The Economic Secretary says that the right period is a matter of judgment. Given the relative generosity of the match that the Government are offering50p per pound saved, based on the maximum account balance over the two yearswe need to encourage people to keep their savings in the account for as long as possible. We have tabled other amendments that explore that issue in more detail. I agree with himit is not something that we necessarily want to put in the Bill.
I am not going to press the amendment, but it is important that we assess the policys long-term effect on savings, and the Economic Secretary was right to comment on that. Two pilots were evaluated and, in the sprit of having an evidence-based policy, we want to ensure that there are longitudinal surveys to see whether two years is sufficient timeor too much, or too littlein which to encourage people to develop a saving culture. With that flexibility in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Hoban: I beg to move amendment 29, in clause 4, page 3, line 21, leave out subsection (3) and insert
( ) The limit on the amount which may be paid into the Saving Gateway account in a month (excluding any interest or other sums paid by the account provider under the terms of the account) shall be £25..
This amendment has been tabled in a similar probing spirit. There is no reference in the Bill to the maximum monthly amount that can be saved, which the amendment would remedy. The explanatory notes suggests that the amount will be £25, and I suspect that that is in the regulations that were circulated to us earlier. For many people, £25 will sound like not very much to save, but it was interesting that Teresa Perchard from the CAB described it as
a huge amount for many to find.[Official Report, Saving Gateway Accounts Public Bill Committee, 27 January 2009; c. 10, Q20.]
There is a balance to be struck. Clearly, for many people, that would be a huge amount to find, as it might be a significant part of their family income, and they will need to make sacrifices to save anyway near that amount. However, there are others, as we touched on earlier, who might, through contributions-based JSA, have a reasonable amount of money and who would be quite happy to pay £25 a month, and perhaps transfer money from other savings to the saving gateway account to benefit from the 50p in the pound match. Has the Economic Secretary given any thought to whether £25 is too generous a limit, given the potential loss to the Exchequer from people who are more than capable of saving that amount, who do so already, and who just want to take advantage of the great returns that the saving gateway account will offer them?

Jeremy Browne: I rise briefly to support the spirit of the amendment. It is important that the amount is stated in the Bill, and that is crucial for ones approval of it. There is understandable concern in some quarters that the 50p that every pound attracts is a very generous provision20 times more generous than a commercial scheme would typically offer. Therefore the maximum amount that could be put aside each month to attract that amount from the Government is an important consideration. It is unsatisfactory for the Bill simply to say
Regulations may, in particular, impose a limit on the amount,
as if it were some casual detail that would have to be dropped at some point when the Government were considering these matters in the round. If we were being asked to approve a much higher, or even much lower, sum, it would have an impact on the willingness of Committee members or the House in general to support the Bill as a whole.

Ian Pearson: Thanks to this Governments strong management of the economy, we have had low and stable inflation for a considerable period. It is right to have the opportunity to update limits on potential savings. It would not be normal to prescribe an amount in a Bill and then to introduce future Bills to update it regularly. For that reason, I strongly resist what the hon. Member for Taunton says about this.
The hon. Member for Fareham tabled the measure as a probing amendment. He suggested that some people who were on contributions-based JSA could be on relatively high incomes and so there might be a deadweight effect to our policies. We discussed that earlier. As I indicated, the number of people in such circumstances would be extremely low.
For the target group whom we are trying to encourage to save, £25 a month is certainly a stretching savings target. Some will be able to achieve that, while others will not. Both pilots certainly showed that the participants thought that £25 was about the right sort of figure. It was potentially an achievable target, but very difficult for many. Obviously, we would want to keep these matters under review. That is why it is appropriate not to put a figure in the Bill, but to set it out in secondary legislation.
I can confirm that the draft regulations set out savings of £25 a month. That is our best view on an appropriate figure. In all such cases, there is a matter of judgment, but I think that our judgment is widely supported by the range of agencies that look into these matters, with which we have worked closely.

Mark Hoban: I am grateful to the Economic Secretary for his comments.
The £25 limit is a target that will stretch people. It will be good to encourage people to save as much as they can. One of the advantages of the scheme is that it will enable people to withdraw, so if they have stretched themselves too far by trying to achieve that £25, there will be flexibility to enable them to withdraw some of that money and to rebalance their expenses and savings.
People might need to look at this. If the scheme proves to be a success, it might be decided in 10 years time that £25 is not enough. It would be very tedious to have to introduce primary legislation to lift the limit from £25 to an inflation-linked figure. With that in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5

Approvals

Stephen Ladyman: I beg to move amendment 19, in clause 5, page 3, line 36, at end add
(3) Approved account providers must be persons who are regulated by the Financial Services Authority under the Financial Services and Markets Act 2000.
(4) Regulations may limit approved account providers to persons from any or all of the following
(a) Banks;
(b) Building Societies;
(c) Friendly Societies;
(d) Credit Unions;
(e) Industrial and Provident Societies;
(f) Post Office Ltd..
I tabled this probing amendment to ask a number of questions of the Economic Secretary. The first part of it will give him the opportunity to confirm that every body providing one of these accounts will be an organisation regulated by the Financial Services Authority, which will thus mean that the people holding these accountsif they have been wrongly advised about taking them up or using the money in them when they maturewould have access to the Financial Ombudsman Service to have their complaint investigated. That is more than an academic point because industrial and provident societies are not regulated by the FSA, so people invest in an industrial and provident societyas some people might wish to dodo not have access to the ombudsman. I am not suggesting that many IPSs are knocking down the door of the Government to set up these accounts, but they might want to in the future.

Mark Hoban: Is not one of the risks that if IPSs accept money under saving gateway accounts, they will be not only not covered by the FOS butas members of the Presbyterian Mutual Society in Northern Ireland have found outnot covered by the Financial Services Compensation Scheme either?

Stephen Ladyman: The hon. Gentleman makes an extremely good point. Again, that emphasises why I want the Economic Secretary to confirm that the only approved providers of these accounts will be those that are regulated in such a way that access to such protections exists.
The second part of the amendment, in which I have broken down various organisations that might provide these accounts, is there to give my hon. Friend the Economic Secretary the opportunity to say whether he intends to be permissive in allowing organisations to provide these accounts, or whether he is intending to use the provision of these accounts for other purposes.
One of the things that struck me in the evidence-taking session was the apparent reluctance of the banks and building societies to provide such accounts. They seemed to be taking the attitude that the job of creating new business for them is not theirs, but the Governments. I regard encouraging people to save and to become prudent with their finances as the job of the people who provide accounts. When the supermarkets wanted to encourage people into their shops, they ran loss leaders to encourage people to use them. The banks seem to have no such ambition to encourage people to save. Indeed, they do the very opposite by providing the best rates of interest to the people with the most money, while providing no additional services to encourage people on low incomes to save. They are clearly reluctant to get into this market. I recall the difficulty that the Government had in making them provide basic accounts for people on low incomesthey almost had to dragoon many banks into providing them.
If the banks are reluctant to provide these accounts, why do not the Government use this scheme to encourage certain people, perhaps by restricting these accounts to post office counters? Why not provide an extra opportunity for local post offices to thrive by saying that they are the only place where people can get these accounts?

Jeremy Browne: I have some sympathy with the hon. Gentlemans arguments, but the concern that I expressed in last weeks exploratory discussions remains valid. Will people who have a bank account be more inclined to open one of these accounts if they can open it with the bank with which they hold that account? If they have to have two accounts at two separate institutions, it might be a deterrent.

Stephen Ladyman: The hon. Gentleman is quite right, and I am not promoting this idea as a proposition. I am simply asking whether the Government want the power to restrict accounts to individual organisations. I would think seriously about restricting the accounts to post offices and friendly societies to encourage those institutions. I am asking my hon. Friend the Economic Secretary, by way of this amendment, whether he will have the power, through regulation, to restrict the sort of organisation that may provide accounts to those classes of organisation. If he says in the future, I dont want banks doing this, because I dont trust them to do it properly and to provide the right advice; I want to limit the people who may provide these accounts to the Post Office and friendly societies, will he have the power to implement that under the Bill?

Ordered, That the debate be now adjourned.(Mr. Blizzard.)

John Bercow: The Committee will adjourn until 4.30 pm, not 4 pm, as is erroneously stated on the selection list. The room will be locked in the interim, and Committee members may safely leave their papers here if they wish.

Adjourned till this day at half-past Four oclock.